Longsys Electronics delivered a sharp earnings jump in the first three quarters of the year, helped by the latest price upcycle in the memory market. According to the report cited in the source article, the company posted revenue of 38.718 billion yuan in the first three quarters, up 131.37% from a year earlier, while net profit attributable to shareholders reached 14.322 billion yuan, up 1,909.68%.
The source article says profit rose faster than revenue, showing that the company kept more earnings from each yuan of product sold. It also notes that Longsys earned a little more than 700 million yuan in the same period last year, compared with more than 14 billion yuan this year.
Profit surged year over year, but third-quarter earnings fell from the second quarter
The growth had already shown up earlier in the year. In the first quarter, Longsys reported revenue of 9.909 billion yuan and net profit attributable to shareholders of 3.862 billion yuan. For the first half, revenue was 24.088 billion yuan and net profit attributable to shareholders was 10.577 billion yuan.
Using the cumulative figures cited in the article, second-quarter net profit was about 6.715 billion yuan, while third-quarter net profit came in at 3.745 billion yuan, down about 44.2% quarter over quarter. The article draws a distinction between the two comparisons: the year-over-year jump shows how far the company has moved above last year’s level, while the sequential decline shows that the second quarter remains the high point for profitability so far this year. A low profit base in the prior-year period also magnified the first-three-quarter growth rate.
Recurring profit gives another angle on where earnings came from. For the first three quarters, recurring net profit attributable to shareholders was 14.210 billion yuan, only about 112 million yuan below reported net profit of 14.322 billion yuan. Based on the financial statement classification cited in the article, non-recurring items had only a limited effect on cumulative profit.
The article adds an important caveat. Recurring profit still includes profit generated through normal sales, and that also captures gains tied to higher memory prices. A high share of recurring profit means earnings were less dependent on one-off items, but it does not settle how long profitability can last. That still depends on prices, costs and orders.
In the third quarter, recurring net profit attributable to shareholders was 4.162 billion yuan, above reported net profit of 3.745 billion yuan. The reason, according to the article, was about negative 418 million yuan in non-recurring gains and losses during the quarter, including about negative 494 million yuan from fair-value changes and disposals related to financial assets and financial liabilities. The article says operating profitability should be assessed separately from swings in those items.
How the company makes money
Longsys was founded in 1999 and listed on ChiNext in 2022. The company focuses on semiconductor memory application products, covering research and design, packaging and testing, manufacturing and sales. Its products span embedded storage, solid-state drives, portable storage and memory modules.
In the supply chain, Longsys sits between upstream memory wafer suppliers and downstream device customers. Turning wafers into usable storage products requires a controller chip to manage data scheduling, firmware algorithms to handle read and write operations, and then packaging and testing. Product requirements differ by end market. Smartphones care more about power consumption and size, servers put more weight on reliability, and consumer buyers also look at brand, price and after-sales service.
The company generates revenue by selling products. FORESEE is mainly aimed at industrial and enterprise storage, while Lexar targets consumer storage. Product design, customer adaptation and channel accumulation affect who buys the products, what price they sell for, and whether customers come back with another order.
Price increases helped release profit, but inventory spread was not quantified
The article says the industry-wide price increase was an important condition behind this round of profit expansion. In a rising-price cycle, selling prices move up while inventory purchased earlier is carried at historical cost, which can widen the spread on sales. As replenishment costs rise, that benefit changes over time.
Longsys did not separately quantify how much profit came from inventory spread, and the article says outside analysis should keep that boundary in mind.
The company has already said that DRAM and NAND Flash price increases narrowed in the third quarter compared with the earlier period, and the boost from wafer price gains weakened. That shifts attention to whether the company can win orders through its products rather than through the cycle alone.
High-end products and customer mix are now in focus
Longsys disclosed that high-end products including UFS4.1, mSSD and ePOP5x have achieved scaled commercial application with well-known major customers. It also said global business tied to Lexar and Zilia continued to grow. The article argues that moving into mass-production supply for customers matters more than simply launching new products, because the technology then has to pass delivery and real-world use tests.
The company’s October earnings preview also said the share of major customers, high-end customers and global customers increased, and that product and customer mix improved further. The article treats that as evidence of stronger operating capability.
At the same time, current disclosure still does not break down how much profit each new product line contributed. The article says commercial progress and profit contribution should be judged separately.
Research and development spending also rose. In the first three quarters, R&D expenses reached 1.503 billion yuan, up 114.52% year over year. The increase included share-based payments and R&D materials. The article says those expenses weigh on current-period costs, while also building capability for future products. Growth has more staying power only if that spending keeps turning into customer adoption.
Demand is splitting, and AI demand still has to become orders
Demand in the storage industry is diverging. A TrendForce study from August, cited in the article, said demand for AI servers, especially enterprise SSDs, remained strong and NAND supply was tight. Smartphones and PCs, by contrast, were constrained by higher end-market costs and higher selling prices.
TrendForce also said the combined revenue of the top five listed NAND Flash brands reached $68.87 billion in the second quarter of 2026, up 77% quarter over quarter. The article adds that this figure covers a specific group of upstream listed vendors and represents only part of the flash industry. It is not the same market scope as the storage module segment where Longsys operates.
For Longsys, the article says any opportunity created by AI still has to pass through product adaptation and customer procurement before it becomes revenue. Rising demand for high-capacity, high-performance storage can raise the value of solution design, while customer requirements on power consumption, size and stability also create room for technical know-how to matter.
Peers have different strengths
According to the company’s prospectus, the main peers listed include Kingston, Phison, Biwin Storage and Demingli.
- Kingston has global channels.
- Phison covers flash controllers and related solutions.
- Biwin provides storage products and advanced packaging and testing.
- Demingli focuses on self-developed controllers and storage solutions.
The article says Longsys’ opening lies in combining controller, firmware, packaging and testing, and brand capabilities to meet customer needs faster. Customers need to verify performance and reliability before adopting a storage product. Solving problems continuously and supplying products steadily are what can turn one cooperation into an order for the next product generation.
Inventory, cyclicality and cash flow remain key variables
Industry cyclicality still matters for profit. The article says higher prices can encourage capacity expansion and can also suppress some end-market demand. More capacity and slower demand both change the supply-demand balance.
If inventory bought at high prices meets a later product price decline, margins can be squeezed and inventory write-down risk can rise. Even with AI opening a new pocket of demand, procurement and inventory management still determine how well a company can absorb volatility.
On cash flow, net operating cash flow in the third quarter turned positive at 877 million yuan, improving from the net outflow seen in the first half. Even so, cumulative net operating cash flow for the first three quarters was still negative 2.274 billion yuan, which the company said was mainly tied to increased procurement payments. The article calls the single-quarter turnaround a positive change, while saying it remains to be seen whether the improvement can continue through the full year.
As of the end of September, inventory stood at 28.456 billion yuan, up 143.67% from the end of last year. That inventory supports future deliveries, but it also ties up capital. The better sales, procurement and collections are matched, the more room the company has to handle price swings.
Using the consolidated balance sheet, the article calculates the asset-liability ratio at about 45.15% at the end of September, versus about 63.25% at the end of last year. It also notes that newly issued private placement shares were listed in August and H shares were listed in September, strengthening the company’s capital base through equity financing. The decline in leverage is clear, though the article says it reflects both profit accumulation and financing.
What to watch next
Overall, the article says Longsys’ earnings leap in this cycle was driven by both the industry upswing and support from product upgrades and a better customer mix. High-end products moving into mass-production application and the return to positive quarterly operating cash flow give that constructive view more concrete support.
The market this year, in the article’s framing, gave the company more capital and more time to move toward the high-end segment. What matters next is whether customers keep placing orders, whether products can be delivered steadily, and whether profit can keep turning into cash.
The source article says the figures were checked as of Oct. 30, 2026. Amounts were rounded to 100 million yuan, second-quarter data was derived by subtracting first-quarter figures from the half-year report, quarter-on-quarter calculations used unrounded amounts, and the asset-liability ratio was calculated as total consolidated liabilities divided by total assets. The piece was originally published by the WeChat public account Touhang Quanzi and credited to author Touhang Dashijie.
